Wednesday, March 06, 2013

(Nomura): Is Bumi Resources selling Bumi Minerals?

It is widely known that Bakrie group is rich in assets but tight in
cash. In our view, most of its assets will fetch a much higher value
(vs. implied by current share price) if Bakrie group is willing to
divest. As such market/investors have been watching closely if Bakrie
needs to sell assets to raise fund or how it will be able to secure the
US$278m cash to pay BUMI Plc as part of the payment to buy back the 29%
stakes of Bumi Resources (BUMI IJ).

We believe key assets that will attract strategic investors (IF Bakrie group is willing to sell) includes:

In
his note today, Isnaputra Iskandar highlighted that Bumi Resources’
(BUMI IJ) ownership in Bumi Minerals (BRMS IJ) has declined from 87.1%
in 1H12 to 45.1% in Feb13 based on data from share register office
(Sinartama Gunita).

Bumi Resources: Why different.

Our
analysis suggests that BUMI’s (BUMI IJ, Neutral) stake in Bumi Resources
Minerals (BRMS IJ, Buy) has been on a declining trend (see Fig. 1)
since the middle of August 2012, and since then Long Haul Indonesia
(LHI) has emerged as a significant stakeholder in BRMS. As of February
28, 2013, BUMI and LHI had 45.13% and 12.80% stakes, respectively, in
BRMS. This data is based on information from Sinartama Gunita (SG),
BRMS’s securities administration bureau. The data from SG is in contrast
to BUMI’s and BRMS’s statements that BUMI still has an 87.09% stake at
BRMS (see Fig. 2).

Our analysis on BRMS’s ownership structure as
of September 30, 2012 BRMS reported different ownership structure than
the data from SG. We believe that should BUMI divest its stake in BRMS
properly to reduce its balance sheet burden, it would be a positive
catalyst for the share price. But, lack of information on this front
would create negative sentiment on BUMI’s share price, we believe.